How the budget affects individuals…
Following the Chancellor’s spring statement this afternoon, it appears that the planned 1.25% increase in national insurance will continue to go ahead in April, in order to raise funds for health and social care. However, as part of the government’s Tax Plan, the Chancellor is attempting to take the sting out of this new levy, by increasing the NIC threshold by £3,000, rather than the planned £300.
This increases the annual National Insurance Primary Threshold and the Lower Profits Limit from £9,880 to £12,570 from July 2022, to align with the income tax personal allowance. Self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will continue to accumulate National Insurance credits, but will not pay any Class 2 NICs.
The speech finale included a rabbit-out-of-the hat announcement, where “for the first time in 16 years” a 1% cut in income tax will be introduced, taking the basic rate of tax down from 20% to 19%. Budget documentation confirms that this reduction will take effect in April 2024.
Another welcome change in the current climate takes effect from 6pm this evening, as fuel duty will be cut on petrol and diesel by 5p per litre for 12 months – a further little saving to add to the collection.
However, what additional changes can we expect in future? The Tax Plan says the following…
… therefore it appears we should all watch this space!
If you require any assistance with your tax affairs then please contact one of our offices or speak to your usual contact at Whitings.